Counter payday lenders to protect the community

Listening to the community helps Karen Madry stay connected with Afena Federal Credit Union’s 8,000 members.

“Our community is at the heart of everything we do, especially the work we do to provide alternative lending solutions to underbanked and low-income people,” said Madry, president and CEO of the cooperative of $84 million asset loan to Marion, Ind. “Like many very poor communities, we have a proliferation of high-interest loan shops and payday lenders who take advantage of financial vulnerability. It’s our job to educate as many people as possible that there is a better way.

Madry’s commitment to providing low-interest loans as an alternative to payday loans led to the creation of “Bridge the Gap” loans, a unique partnership between the credit union and the Community Foundation of Grant County.

The loans provide members with emergency funds between $200 and $2,000 and are available exclusively to people earning less than 80% of the median family income. Repayment terms vary by loan amount, but favor small payments — typically less than $50 a month — to reduce the stress on family budgets created by predatory payday loans.

Madry has developed an additional program to help members who have already fallen into the clutches of high interest loan shops.

“We have members with loans at finance companies that pay upwards of 50% to 60% APR, sometimes more,” she says.

“It’s our job to educate as many people as possible that there is a better way.”

Karen Madry

Refinancing high interest rate debt saves members thousands of dollars in interest. Madry recounts how a member reduced his monthly payments by $1,200 when he refinanced his loans through the credit union.

Designing loan products that meet community needs has helped Afena Federal Credit Union thrive, but growth can be difficult.

“My biggest challenge is figuring out how to strengthen my staff in a society where people are increasingly looking to work remotely while ensuring members get great service when they’re in branch,” says Madry. “Older members are more bricks and mortar while younger members are all about technology. We are constantly trying to thread that needle.

The credit union’s stock and loans were up more than 12% year-over-year at the end of October, while assets were up more than 15%. The introduction of remote deposit capture, instant issue debit cards and a rewards credit card program in 2022 will allow Afena Federal Credit Union to continue its growth.

Madry, who joined the credit union as CEO in May 2014, lives with a busy schedule, relying on her faith and daily prayer to “fill the well.”

Serving on CUNA’s Small Credit Union Committee provides networking and inspiration, including “permission to think outside the box.”

“I think the reason so many small credit unions are disappearing is that they’re stuck like they always have been,” Madry says. “We must be continually ready to reinvent ourselves.”

This article is part of Forging a Path, CUNA News’ special focus on what 2022 holds for the credit union movement, the financial services industry and the economy. Follow the conversation on Twitter using the hashtag #ForgingAPath.